A precision-parts manufacturer almost auto-renewed a 5-year uniform contract that contained three predatory clauses they didn't know existed.
The plant's controller received the standard 60-day pre-renewal notification from their uniform vendor and reflexively forwarded it to operations to sign. The CFO happened to ask whether anyone had actually compared the renewal terms against market — and the honest answer was no. They had 30 days before auto-renewal kicked in for another 5 years.
We analyzed both the existing agreement and the proposed renewal. The existing contract contained an exclusivity clause covering every facility location (including a second site they had opened in 2023 with a different supplier — a technical violation they hadn't realized). The renewal had a 4% annual price escalator with no cap, an unlimited 'pass-through' clause for fuel and environmental surcharges, and a 50% early termination fee. We helped them put out an RFP and used the analysis as leverage with three vendors.
They moved to a 3-year (not 5-year) agreement with a different vendor at 28% lower base pricing, a 2% CPI-tied escalator cap, and no exclusivity clause. Their annualized savings were $67,400, and they avoided a 5-year lock-in to a contract they would have regretted.
"If we had auto-renewed, we'd have signed up for another five years of escalating costs and a clause that technically made one of our locations a contract breach. That's a real number — we just didn't see it."
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